Monday, November 23, 2009

Sideways Discrimination: An Important Lesson

Steven E. Landsburg has argued in his book Fair Play and now on his new blog that it’s generally acceptable (morally and legally) for tenants to discriminate against landlords, and workers to discriminate against employers, but not vice-versa.

Let me illustrate with a stylized example economists love so much. Mary owns a vacant apartment; Joe is looking for a place to live. If Joe disapproves of Mary's race or religion or lifestyle, he is free to shop elsewhere. But if Mary disapproves of Joe's race or religion or certain aspects of his lifestyle, the law requires her to swallow her misgivings and rent the apartment to Joe.

Or: Bert wants to hire an office manager and Ernie wants to manage an office. The law allows Ernie to refuse any job for any reason. If he doesn't like Albanians, he doesn't have to work for one. Bert is held to a higher standard: If he lets it be known that no Albanians need apply, he'd better have a damned good lawyer.

These asymmetries grate against the most fundamental requirement of fairness--that people should be treated equally, in the sense that their rights and responsibilities should not change because of irrelevant external circumstances. Mary and Joe--or Bert and Ernie--are looking to enter two sides of one business relationship. Why should they have asymmetric duties under the antidiscrimination laws?

When the law is so glaringly asymmetric, one has to suspect that the legislature's true agenda is not to combat discrimination on the basis of race, but to foster discrimination on the basis of social status. By holding employers and landlords to a higher standard than employees and tenants, the lawmakers reveal their underlying animus toward employers and landlords.

We've heard a lot--and I suspect more than enough (in the sense that nobody any longer has anything new to say on this subject)--about reverse discrimination, where the law distinguishes unfairly between blacks and whites. But we've heard far too little about sideways discrimination, where the law distinguishes unfairly between, say, landlords and tenants.

If you don’t want to live in an Albanian-owned building or an work for an Albanian employer, that’s your right (no matter how strongly we might strongly disapprove of your attitude). By analogy, then, it might seem that landlords and employers should have the same right to discriminate.

Now clearly the situation is not that simple; landlords and employers are not the same as tenants and employees. But the question is: Are they not the same in any way that is morally relevant? The most frequently cited difference (in my experience) is that landlords and employers tend to have more market power than tenants and workers. Putting aside the question of whether that’s true, it can’t possibly be a full justification for treating landlords and employers differently, and here’s why: There are plenty of instances where we don’t think that market power takes away your right to discriminate. Extremely attractive people have a lot of power in the dating market, but I think it’s safe to say that almost nobody thinks the most beautiful among us should be forced to date Albanians, or to prove that they choose their partners according to some objective criterion other than national origin.

So if you think it’s OK for tenants to discriminate but not landlords, you’ve got to face the question: What is the ethically relevant distinction here? It’s clearly not market power, so what, if anything, is it? I do not deny that there might be a good answer to that question, but I must admit I can’t imagine what it would be.

MP: I presented this dilemma in an economics class once about ten years ago at the University of Michigan-Flint to provoke some discussion on the economics of discrimination, and made the mistake of using blacks in the example instead of Albanians, and was accused by a black student of being racist - the emails and anti-racist literature that I received went on for several weeks. It reminds of the Norwegian proverb "Experience is the best teacher, but the tuition is high."

26 Comments:

Government gives Federal Reserves money from taxpayers, by way of bonds, disguised as quantitative easing. Federal Reserve gives money to banks, to lend to companies, to leverage capital within the free market economy. Company and original taxpayer complete the circle of capital. Isn't it beautiful? Dabbing tear of irony.

The relevant difference is one is offering the service and the other is buying the service. In general it has been held that the service needs to be offered to anyone, but there has never been a requirement to buy any service. The customer refusing to buy from a vendor is well established and ranges up to various boycotts because someone decided to advertise on some program. In any case proving that someone did not rent a place because of a protected feature of a landlord would be impossible, since one could say one did not like the color of the front door of the place. In addition it would be hard to establish a pattern of renter behavior, while landlord behavior is establishable. Since it is clear that the whole law situation in the US is at least 1/2 a joke, in that a lot of crimes go uninvestigated due to resource limits (the IRS admitted as much at one congressional hearing). Its much more today that if you rub the authorities nose in an offense they will react.

If you change from blacks to Albanians in your presentation you are swayed by opinion. Once opinions are introduced as relevant factors, which they must be if you change, the theory fails that is no difference between the two discriminations.

So, you were Larry Summered for a while? There is a huge difference between being smart and being wise: Isn't there?

Blacks, Albanians, ginger haired people, people with blood type A, people of a certain star sign, the reason for discrimination is immaterial.

If you decide to buy your carrots from a ginger haired greengrocer rather than a purple haired greengrocer that is your perogative. You can choose any greengrocer you wish, for any reason.This is called choice, not discrimination.

The real problem isn't should we be allowed to discriminate, it is why do we feel the need? If, in this day and age, you can't deal with living in a world with people who have different colour eyes, hair or skin then you need serious help.

It's dog eat dog out there so the profitable businesses will prosper and the unprofitable businesses will fail (well unless the US government has anything to do with it).

Why forgo profits?

If the staff want to maximise their earnings it is in their interest to cater to every possible customer.

And any business that discriminates against people because of their star sign, or their eye colour deserves to have no customers at all.

What we'd end up with is a system where certain people would have to pay more to obtain the same service or product for no reason other than the misconceptions of the vendor.

The real problem with this attitude is that if we changed the law and said anybody could discriminate for any reason they wish, we would segregate society which in the long term would make the problem worse. (I.e. there would be more discrimination). Of course if green eyed people make you sick you'll probably think this is a good thing!

Perhaps it comes down to the age old mantra... the customer is always right!

Is it not fair to say if you are so ignorant that you think you should have the right not to provide your service to someone of a particular race then you should forgo the right to operate a public service (which is essentially what businesses are).

I know which kind of society I would rather live in: One where everybody is treated equally regardless of when, where and to whom they were born.

And what about the rights of individuals to be treated fairly and not to be discriminated against? Does this not trump the right to discriminate?

RE: NiknakWhat is fair? I ask that sincerely. Is fair, my old college bball coach playing me as much as the next guy because I work just as hard? Is fair, every girl I ever asked out saying 'yes'? I work in the financial services industry and is fair every potential client saying 'yes'? Is fair, every person trying to buy a million dollar home being able to?

As a capitalist, this is an economic question. If I'm a landlord and I want to discriminate thats my choice (and right) as a property owner. It's completely insane and short-sighted for me to refuse someone just because their Albanian but it's my right. As a capitalist, I want to get the most money for my property or as a consumer get the most bang for my buck. Therefore, the only color that matters is green.

I find it sad people who discriminate for irrelevant reasons (i.e. not economic ones like say I worry they'll make their rent payments). But its their choice and usually they end of missing out on things in life.

To me, fair (economically speaking) is money going to the most efficient uses to make its owner more to then be used for the betterment of myself, family, friends and strangers around me.

I think what is missing in this discussion is power. Power is not symetrical.

Would it be OK with you if I pushed you down because I am much bigger than you? If not, why? We are both just one person are we not? So what would be your problem with me expecting you to be able to stand your ground then?

Here's the rub. Landlords can and do discriminate based on economic factors. If an applicant is show to be incapable of paying the monthly rent, they have the right to refuse to rent to that person. Employers can do the same thing without much difficulty. The reality is, discrimination based on race or factors other than economic ones will ultimately lead to failure because it creates an instant source of inefficiency in the market. If I refuse to hire a qualified engineer because he is black, I will have to spend more to find a suitable engineer in a group that is to my liking. I don't have to say it's because he's black. I could simply say, "We didn't hit it off in the interview." Also, I've just wasted time and money. Never mind that my colorblind competitor will happily hire the black engineer and spend less on recruiting than me. My costs are higher as a result and I will ultimately fail. That said, these laws are redundant and unnecessary.

The real problem with this attitude is that if we changed the law and said anybody could discriminate for any reason they wish, we would segregate society which in the long term would make the problem worse. (I.e. there would be more discrimination).

Really? This implies that the only reason that we are so enlightened today and treat people with greater equality is because legislation forces us to be. That is to say, that natural law - which emerges spontaneously out of shared expectations, values, and social norms - is ineffective and the only way to get people to "do the right thing" is to enforce it through legislation. I wonder, does anyone have any proof that the Civil Rights legislation is the only reason we experience any semblance of equality at all. (Hint - See Thomas Sowell's take on this matter).

Authority and Responsibility are two sides of the same coin. The employee has no authority over the employer and only a responsibility for himself. If a man's family loses their home and savings because he refuses to work for a black man (the only job available), then that is his responsibility and, therefore, well within his authority to decide.

However, employers have authority over employees and therefore have a responsibility for equal application of policy.

First, let me state that I went to jail in Baton Rouge in 1962 for removing segrated rest-room signs as a demonstration against racism.

Year later as a landlord of several houses, I soon discovered that of about 40 families that I rented to, EVERY black family (about half)either left the place trashed or left owing money. I started renting to white families only and found that about half of them left also left in bed circumstances--at least it was an improvement. I am easing out of the landlord game now--only have one tenant now--a white woman with a black husband! And they seem OK.

I would suggest that employers don't in fact have more power that the employee. They have more tolerance for the costs of abruptly terminating that relationship.

Now, that sure feels a lot like power, but it is different. If I decide to walk out on my job, I just tell my boss "I quit" and that is that.

He can't beat me. He can't sue me. He can't stop me.

He can refuse to give me a recommendation if another prospective employer calls...but then, I can bad mouth him to all my acquaintances just as easily.

And to Lyle's comment: do you mean to suggest that if a prospective employee wants to walk into a business that is not hiring and ask to put in an application he should be compelled to accept a job from the business next door because he is the one "offering a service" (to whit: his labor and talents, whatever they may be)?

as a landlordin a rent control jurisdictioneven worse is that you cannot end your relationship with a difficult tenantthey can move whenever they like but for you to get them out there are many legal hurdlesthis really distorts the relationship